Adulting: Lesson #1
From 'Making Tax Digital', to starting your own business, here's all you need to know to be super-organised (and win a few brownie points with your accountant).
Is being more organised with your finances on the ‘to-do’ list this year? Maybe you’re taking the plunge and going self-employed, or starting your own business? Whatever your goals, if just hearing the words ‘tax’, ‘bookkeeping’ and ‘VAT’ send you into a cold sweat, then you’ll want to have a read of this. We’ve been picking the brains of the lovely Charlotte at Woolston Accounts in the South Hams, to help answer all those niggling questions that you’ve always wanted to ask. Welcome to adulting!
Firstly, can we talk about ‘Making Tax Digital’? I keep reading about it, but I’m an old-school paper-based business – help! What’s this going to mean for me? Where do I even start?!
Firstly, breathe! Secondly, don’t panic! There’s so much help and guidance out there as, remember, there are so many people also in your shoes. Making Tax Digital (MTD) comes into force on 1 April 2019 for all businesses whose turnover exceeds the VAT threshold of £85,000 per year. The first VAT return required to be submitted via MTD methods is the first VAT period commencing after 1 April 2019. So, for example, if your usual VAT quarter runs from February-April, your first VAT return to be submitted under MTD will be May-July.
Spend a little time reading around the subject to get a grasp of it, before even thinking about tackling the few ‘to do’s’ to get yourself ready. The main difference is that you’ll be using a computerised software to complete your bookkeeping, rather than being paper based and, honestly? This doesn’t need to be as scary as it may sound.
So, if I’m going digital, am I going to need to purchase a software package? What are the options?
In our opinion yes, MTD is pushing for digital records. There are some bridging softwares available that enable you to submit spreadsheet bookkeeping, however, there’s no escaping the fact that the future is fully digital, and we believe the future is cloud softwares.
The three main options in our opinion are Xero, Sage and Quickbooks.
Of those, Xero is for sure our preference, it’s a fantastic software that really is super user-friendly, we love it! You simply enter your sales and receipts, match to a bank transaction and it calculates your VAT as it goes along – simple, hey? We’re currently preparing for some Xero training courses and set-up offers to help clients be “MTD Ready”; we’re also writing a simple guide to using Xero, making the transition as simple as possible for our clients.
I’m one of those people who always leaves my accounts until the last minute, which my accountant secretly hates me for. When is the best time to organise everything and earn myself brownie points? Any tips?
Oh dear…being an accountant, what can I say?! I certainly don’t hate any of my clients (even secretly), but boy do those late drop-offs of records in January make my life hard. It certainly ups the pressure, too!
It’s easier said than done, and I know it probably sounds dull, but keeping your records nicely organised throughout the year really does make the job sooo much easier. Set aside some time each month to go through the bank statements and put all related receipts together in a wallet etc. Or on a weekly basis go through your bookkeeping software and reconcile that bank, you’ll feel good for it after.
Tip: Although I don’t hate any of my clients, there are definitely those super-organised ones who are never late, and hand in their records all tidy; if/when they do need something at short notice, I’m more likely to prioritise them…just saying #browniepoints !
This year, I really want to start my own business. Until now, all the paperwork and managing the finances has scared me off. Where do I start?
I always start anything with a To-Do list and I’m also a traditionalist, so grab a pen and paper to do the job. It’s a nice excuse to get some nice new stationery and plus, you get the enjoyment of ticking or highlighting completed tasks off and making it look pretty.
Next, make sure you register yourself as self-employed with HMRC, get yourself a separate bank account – it makes bookkeeping so much easier – and take time to think your business out and make sure you have all the skills and equipment in place before you start; basically don’t run before you can walk (that old saying).
Then you need to consider the structure of the business; do you trade as a sole trader or incorporate a limited company? It would be wise to get some advice on this unless you’re already well-informed.
Other things to think about depending on the nature of your business; website/email domains, telephone set-up, insurance, vehicles, staff etc; all of which bring their own tasks. Keep ticking as you go and you’ll be a business before you know it!
What are THE most useful things I can do to help the whole process and make things as painless as poss?
I’d set yourself three simple rules:
1. keep all receipts/invoices in wallets by months, or I personally organise them A-Z in a file;
2. Keep your bookkeeping up-to-date on spreadsheet or bookkeeping software (bear in mind those MTD requirements mentioned above) and;
3. Get your paperwork handed in to your accountant with plenty of time before submission deadlines.
Being Organised – is there an art to it?
Oooooh, now we’re talking one of my favourite activities, let’s just say my pantry is full of Kilner jars all neatly labelled with its contents!! From experience, there is no teaching organisation, I can definitely pass on tips, but it’s a bit like Marmite; you either love being organised or hate it, and I’m definitely in the ‘love’ camp!
I keep a constant To Do list, so I always know what I need to do; I keep it in a notebook that goes with me everywhere I go, so it’s always to hand to add those thoughts that pop into the brain every now and again, and are never there when you get home. Every day I flick through and see which are the most important tasks, that have an approaching deadline and they get priority focus. Tick lists are also a common organisation tool I use, digital or manual. I have a tick list for my monthly payrolls so I know I’ve done them all, for my VAT quarter deadlines and another for my year ends.
I don’t really ‘get’ what else an accountant can do for me, other than my annual company accounts. Am I missing a trick?
Accountants can actually help clients with lots more aside from the standard accountancy services of year end accounts and tax, bookkeeping and vat returns, payroll and CIS. Here at Woolston Accounts we offer much of what our clients require and have asked us for, from payments to suppliers, financial reporting, customer debt chasing to customer invoice preparation.
We also have a few clients who’ve loved the work we’ve done for them on an accountancy basis and have now started using us as more of a PA, which is a good sign that they trust us and a nice endorsement. We help them with tasks like travel arrangements and bookings, document formatting, timesheet management, even things like social media management and making grant and funding applications.
Of course, not all accountants will offer these, but we strive to be all-rounders with professional services, so we can really meet our clients needs. Wouldn’t you rather focus on growing your business, rather than drowning in the admin?!
It’s no good. I’m still terrified of the finance/paperwork side of things. What can I do if I really don’t get along with it?
Tell yourself it’s ok! Finances and paperwork is not for everyone, that’s why people like us exist. I can assure you I would not be capable of doing any work that has a creative edge to it, that’s just not how my brain works. Every person is different, it’s what makes the world interesting.
If you want a chat, have some questions that you want answering, or want to outsource some work, just email me email@example.com (No obligations!). I’d love to hear from you.